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Background Briefing by a Senior Administration Official on the Stability Pact

For Immediate Release

November 18, 1999

BACKGROUND BRIEFING BY SENIOR ADMINISTRATION OFFICIAL ON THE STABILITY PACT

Conrad Hotel Istanbul, Turkey

7:42 P.M. (L)

SENIOR ADMINISTRATION OFFICIAL: What I'd like to do is give you a little background on what the Pact is, what we've done here in Istanbul regarding the Pact, and what some of the key accomplishments are. My colleague will then describe some of the things that the U.S. is doing to implement the Pact, as well as a meeting of foreign ministers this morning that we had on the issue.

As everybody here knows, the stabilization and revitalization of Southeast Europe is one of the administration's highest priorities. It's difficult, of course, to talk about doing this across the region as long as we have the current regime in Belgrade there, but what we are doing is looking at the rest of the region and, in partnership with the countries themselves and the European Union, doing what we can to strengthen democracy, to promote their economic development, and to strengthen security.

This commitment to the leaders from the leaders of the United States and Europe, to the leaders of Southeast Europe, was made at the Sarajevo summit last July. That high-level meeting showed both the importance of this issue to all of those involved, both for the future of the region and also for the future of Europe, as well as the need to coordinate with each other more fully if we're going to really make a difference and bring the region around, so that at one point in the not-too-distant future, we'll be able to talk about Europe rather than Southeast Europe and the rest of Europe.

Let me just outline some of the ideas that guide the U.S. commitment, a very strong commitment, to this political bargain that we have reached with the states in the region. the first is that the states in the region really have to assume ownership of this process just as the states of Western Europe did after the Second World War.

And second of all, we want both to encourage, provide an incentive for the kinds of political and economic reforms that need to be made, and also respond to those reforms by the promise of integration into European and what we call Euro-Atlantic institutions -- like the EU and NATO being, of course, two of the most highly desirable and sought after.

Third, we want over the short and medium term to make clear the need for the EU to bear the lion's share of this commitment, both in terms of actual assistance and also in terms of improving the trading relationship with the region. We have some very good news that the President wanted to highlight today regarding assistance. And that is that yesterday donor countries, with respect to Kosovo, pledged over $1 billion for reconstruction. And this morning at the summit, the President of the European Commission, Professor Romano Prodi, made clear his desire that the EU -- the commission itself, not counting the member states, but the commission alone -- will provide almost -- actually just over -- $12 billion for the entire region of Southeast Europe during the period from 2000 to 2006. This is a very generous commitment, and one that we believe is vital to really trying to turn the region around.

The last part of the philosophy that guides our engagement here is making clear that it's really private investment in the end that's going to drive this process forward.

The civility pact successes since July were recognized today at the summit because it's the first time that the leaders who gathered in Sarajevo were all together again here in Istanbul. The Pact and the OSCE do not have the same membership, but there is a great deal of overlap, as you can imagine. And what we did, both at the breakfast this morning with the foreign ministers and then at the summit itself was have leaders endorse strongly the recent achievements in the last three months.

And what I'll do is just outline a few of those -- I'll outline just a few of those, and also let you know that there are fact sheets that will be available that will describe them in more detail.

The ones I want to highlight and draw your attention to, are, first of all, improving the investment climate in the region. As I said earlier, it's going to be very important to attract more foreign direct investment if we're really going to be able to rebuild this region. So the participants in the Stability Pact have agreed on what we call an investment compact, that makes it clear states in the region will intensify their efforts to create a predictable and fair business environment, which is frankly what we hear is one of the most common complaints as to why companies don't want to invest in the region at this time. Also, they might fight corruption and implement market-oriented reforms -- essentially become far more friendly to foreign investors than they have been, in the future.

The other countries outside the region, like the United States, have agreed to use all available resources to mobilize more private funding, in terms of insurance and investment guarantees, so that investors who were thinking of going into the region will feel they have some kind of governmental protection behind them.

Another accomplishment that was finalized in Brussels on Tuesday was agreement on a vetting process to determine which infrastructure, energy and transport projects will be funded at a donors' conference that will take place next year, probably in February or March. I'm sure many of you have traveled through the region, and you know how badly the infrastructure there needs some outside assistance, which of course will fuel the same kind of investment and trade that I mentioned earlier.

Are we going to have time?

MR. HAMMER: Sure.

SENIOR ADMINISTRATION OFFICIAL: Okay. All right. I'm just going to briefly mention three more initiatives. One is reducing regional trade barriers, both within the region and between the United States and the region -- and even more importantly, Europe and the region, since their trading relationship is about 20 times the magnitude of ours.

States also reached agreement on an anti-corruption initiative. As you know, corruption in many forms throughout the region is one of the biggest hindrances to further economic growth. And they've agreed to a number of specific steps, including working with the WTO and the OECD, to improve their record across the board.

The last one I'll highlight for you up here is an agreement on a very sensitive subject, which is to take a hard look at the way history is being taught in these countries, with a view towards eliminating what others would view as bias or potential prejudice. It's an effort to try to reduce some of the ethnic tensions that are still evident in a number of countries.

And, as I said, you'll see more information about the accomplishments in the three short months since the Sarajevo summit on the back table later.